Firms expect salary stagnation to persist this year

More Hong Kong firms will likely freeze pay this year, compared to 2020, Hays has reported.

Around 37% of employers in five key locations in Asia expect their workers’ salaries to stay the same in 2021 as businesses recover from revenue shortfalls, recruitment firm Hays has said.

In its 2021 Asia Salary Guide Report, Hays found that employers predict a salary stagnation similar to 2020 with only 29% projecting modest increases of up to 3%; whilst 4% sees salary will decrease.

“2021 is not the year for employees or candidates to seek substantial augmentation to their salaries, and they should instead aim to improve other areas of their career,” Kirsty Hulston, Regional Director at Hays Singapore, said.

The report surveyed employers and professionals in China, Hong Kong, Japan, Malaysia and Singapore.

A total of 42% of employers in Hong Kong, in particular, expect there will be no change in their employees’ salaries in 2021, higher than the 38% recorded in the previous year.

Some 4% expect pay to decrease; whilst other firms expect salaries to increase up to 3% (31% of employers), between 3-6% (13%), 6-10% (6%) and more than 10% (4%).

Meanwhile, 28% of employees in the five locations expect that salaries will be unchanged during the year, 4% are expecting a decrease, whilst 19% are expecting a rise of up to 3%.

In Hong Kong, 32% of employees expect a salary freeze in 2021, 3% expect it to drop, whilst 23% believe it will increase modestly.

Hays also noted majority (or 58%) of candidates are seeking new employment for a better salary package. Other major reasons to switch jobs were in pursuit of new challenges and the lack of career progression at their present employment.

“If salary is an employee’s sole prerequisite, they may consider seizing the opportunity by requesting a raise,” Hulston said, citing that 24% of Asia’s employees had asked for and were able to receive pay rises in 2020.

She recommended for employers to provide opportunities for career progression, or better apparatus for work-life balance to remain competitive, and in effect capture talents, whilst controlling cost.

“At a time when cost control is increasingly critical, they should look to offer more innovative enticements,” Hulston said.